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Big rural credit push from RBI, start-ups put in priority sector

Big rural credit push from RBI, start-ups put in priority sector

The Reserve Bank of India (RBI) on Friday brought financing of start-ups under the priority sector lending (PSL) category of the banking sector, proposed more credit flow to districts with lower PSL, and doubled loan limits for renewable energy and health infrastructure “to align it with emerging national priorities and bring sharper focus on inclusive development.”

In a bid to address regional disparities in the flow of priority sector credit, the RBI, in its revised PSL guidelines, decided to rank districts on the basis of per capita credit flow to the priority sector, and build an incentive framework for districts with lower flow of credit and a disincentive framework for districts with higher flow of priority sector credit.

Accordingly, from FY 2021-22 onwards, a higher weight (125 per cent) would be assigned to the incremental priority sector credit in the identified districts where the per capita PSL is less than Rs 6,000, and a lower weight (90 per cent) would be assigned for incremental priority sector credit in the identified districts where the per capita PSL is more than Rs 25,000.

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